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How much should I consider to pay a professional to analyze a potential business? Is it a % of biz price?

Im in the process of selecting businesses (around $300K asking price) in Fla. with about $200K to invest. (Seller financing required) But I dont know how much extra I will need to pay to have it analyzed and risk evaluated
Should an accountant be enough to analyze a biz ? or should it be a lawyer?
If I have short listed 5 biz in Fla, Could the same professional analyze them all? Thanks JR

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Answers (6)
Michael Hamlar
Hamlar Enterprises, LLC
Roanoke City County, VA

Jorge,

That is a great questions that many potential buyers do not include in their decision. We specialize in business valuations and give them at a fair price. The firm we use for business valuation is recognized nationally and we can get them at a fair price. We have information about our business valuations on our website. In regards to needing a lawyer like mention before one is not needed until official documents are signed. If you're interested please contact us mike@hamlarenterprises.com or 1-800-682-1950 ext 101

Jun 4, 2010
Terri Bollman-Wyzkoski
MainStreet Bank
Sr. Commercial Lender
Fairfax County, VA

Jorge,

If you're looking for someone to go into a company and analyze and verify assets, books and records, and processes, you're looking at a range of $3,500 to $5,000 for a finished product. The finished product is a report that provides you with an evaluation of assets, including A/R (trends, turnover, dilution, concentrations, collections process and any shortfalls), inventory (test counts, turnover, slow-moving or obsolete), A/P (A/P turnover, relationships with vendors, esp vital vendors, concentrations & alternatives), and adequacy of accounting system and division of labor of same. Lenders when using any of the assets of the business as collateral will require this field exam to be done anyway.

If you're simply looking for a business appraisal, the cost can range from $5,000 to $15,000.

You may want to consider working with an entity like our firm to help coach you through issues such as these. We're a commercial loan broker firm that provides packaging of loans and placing them with the appropriate lenders. But we also consult throughout the entire transaction process and provide the field exams for companies for which you requires an indepth analysis.

Ultimately, we get our clients lender-ready, and deliver a commitment from a bank or lender from our established lender network. We are staffed with former commercial lenders who know how to structure loan requests and how to negotiate with banks to obtain the most favorable terms and conditions. Our lender network consists of banks and lenders nationwide, including banks that do nothing but SBA loans. Because we know their cultures, their interest (or non-interest) in particular industries, and their specific risk appetite, we can quickly identify the most appropriate lender and obtain the needed loan approval on your behalf.

Check out our website, and then call us when you are ready for financing.

Kindest regards,
Terri B. Wyzkoski
Managing Member
Business Lending Solutions LLC
11654 Plaza America Drive #363
Reston, VA 20191
Twyzkoski@BusinessLendingSolutionsLLC.com
Direct: (703) 655-9939

"Your Financial Solutions Provider"

May 27, 2010
Robert Cutler
Attorney
New York County, NY

I agree with Don that you do not need to hire a lawyer in the preliminary stages, except maybe to negotiate a NDA or to evaluate any legal matters that may come up in your initial investigation. Once you are ready to make the offer, you will want to get your lawyer involved to work with seller's counsel in preparing the letter of intent and to get things moving on legal due diligence.

Apr 19, 2010
ANA Brokers
ANA Brokers
Dallas County, TX
Premium Broker

Hi Mr. Reyes,
We are a Business Brokerage Firm in Dallas and have over 20 years of experience. We analyze and appraise Businesses all the time for buyers and sellers. Please feel free to contact us should you be interested. sales@anabrokers.com

Apr 18, 2010
Julie A. Barnes, CPA
Small Business Exchange, Inc.
Travis County, TX

Hello Jorge,

As a CPA and broker, I obviously agree with Don. I would add one caveat: not all CPA's possess the experience to properly evaluate a business. I know from experience that convenient multiples, for example, while sounding highly scientific, do not necessarily lead to a marketable value.

I encourage you to visit my blog: http://www.AustinBusinessesForSaleBlog.com for free advice about numerous topics that address valuation.

Good Luck!
Thanks
Julie A. Barnes, CPA

Apr 18, 2010
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The BAF Group LLC
MD

I would work with a CPA that deals with business acquisitions. He/she should be able to analyze the numbers and give you input on what else might be going on in the market, from an indstry-earnings basis. If you have access to an accountant that really knows that kind of business, use his/her services, by all means. (When I first became a Broker, I once worked with a Gas Station Seller, whose accountant specialized in Gas Stations. He taught me an incredible amount, and I have used that knowledge ever since!)

But I would also do some heavy research on the market, myself. Talk to others in the market place. Talk to government authorities that might govern the industry. Without mentioning the company, talk to people that might be potential current users, or future clients, to get their input.

You will need an attorney, once you make the offer. However, unless there is an overriding reason to suspect that there are legal issues involved in the marketplace, I would not think you would need an attorney, in doing your initial invistigations.

Apr 18, 2010

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